Florida Keys News
Thursday, April 11, 2013
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New law shutters Internet cafes
Owner forced to lay off 10 employees due to signing of HB 155

Half of Stick Stein Sports Rock Cafe went dark Wednesday when owner Steve DeGrave pulled the plug on dozens of gaming machines.

DeGrave yanked the power the moment Gov. Rick Scott signed House Bill 155 outlawing Internet gambling cafes in Florida.

He was joined by sullen patrons and employees, 10 of whom lost their jobs as cashiers and bookkeepers the moment Scott put pen to paper.

"It's just not worth the risk and you've got to respect it, you don't have to agree with it, but you've got to respect it," DeGrave said.

The crew has been following the bill since news broke last month of a federal investigation into illegal gambling at similar Internet cafes run by the charity organization Allied Veterans of the World.

Gulf Internet Services venues in Tavernier, Marathon and Stock Island were among 51 Internet sweepstakes cafes around the state that were shuttered by state and federal officials in March as part of the massive probe.

The Gulf Internet storefronts, like the others targeted by officials last week, were part of the network run by the purported Allied Veterans of America nonprofit.

Authorities arrested nearly 60 people in connection with Allied Veterans, accusing them of racketeering and conspiracy in what they called a $300 million fraud scheme.

That probe led to the resignation of Lt. Gov. Jennifer Carroll, who once worked as a consultant for Allied Vets charity organization. She resigned, she said, to avoid becoming a distraction to the governor.

Though Stick and Stein Sports Rock Cafe was not associated with the Allied Veterans case, it's a good example of the many businesses that will be affected by the subsequent bill, which redefined illegal gambling machines and includes new restrictions on electronic parlor machines made to look like casino games.

"I don't hold any grudges, but I'd say the Allied case sure messed up a lot of people's businesses," DeGrave said. "I'm not sure how much the state is going to lose in taxes a month to this, but I'm sure it will be millions."

DeGrave paused and added, "Those of us who were doing things right and paying the proper taxes, anyway."

Monroe County State Attorney Catherine Vogel said she hoped businesses in the Keys took DeGrave's lead and shut down themselves on Wednesday without the need for her office to prosecute anyone.

Vogel doesn't have a strong opinion on the machines, but said the old gambling machine law was hard to enforce, had many obvious loopholes and needed to be refined.

"That said, I never heard much outcry here in Monroe County about this issue, but the law is the law and it's effective today," Vogel said. "The reality is that these are illegal now and businesses operating them need to shut them down or they will be prosecuted."

Internet sweepstakes cafes operate under Florida promotional game statutes rather than under gambling laws. Customers at the sites like Stick and Stein Sports Rock Cafe -- and others like Lucky Duck in Marathon as well as veteran's clubs and other lodges throughout the Keys-- use prepaid debit cards to place wagers on the virtual slot machine games, which are housed on computers.

Operators of the businesses say they are not selling slot machine credits, but rather time on the Internet. The sweepstakes entries, they say, are just a giveaway, much like sweepstakes cards handed out by fast-food restaurants to their customers.

Meanwhile, more traditional arcade machine owners -- like those who operate traditional video games such as Pac-Man and skee-ball style games -- are crying foul over the bill as well, claiming they are unintended victims of a law that is far too sweeping, said Florida Arcade and Bingo Association spokesman Mike Wolf.

Wolf's organization supported the ban on Internet cafes, but the bill hurts businesses such as Chuck E Cheese and Dave & Busters too, he said.

Now under the bill, all machines must be operated by coins -- no smart cards or dollar bills -- that don't allow the accumulation of credits, Wolf said, adding that any tickets or credit won on games can no longer be exchanged for gift cards or gift certificates.

"It's not a good bill for us in any way, shape or form," Wolf said. "We don't wish bad luck on anyone, but we just don't understand why we were included in this bill. We had nothing to do with Allied Veterans or Internet cafes. We're a totally different industry."

Merilee Turner was one of the cashiers at Stick and Stein Sports Rock Cafe who lost her job Wednesday. She was joined by many patrons eating a late lunch and pondering what will become of the space DeGrave set aside for the roughly 50 machines.

"I think it's unfair," Turner said. "They (lawmakers) didn't consider how many people are employed who would lose their jobs."

Her co-worker Marcy Knowles agreed.

"It's not like they're offering to pay our bills while we look for work."

DeGrave said he already had some nightclub furniture en route from Fort Lauderdale, but what specifically will become of the space that once housed skee-ball style bowling lanes before the Internet cafe gaming machines remains to be seen.

"Remodel, repeat and start over again, I guess," DeGrave said. "It is what it is."

alinhardt@keysnews.com

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